LENNAR CORPORATION The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and accompanying notes included under Item 1 of this Report and our audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K, for our fiscal year endedNovember 30, 2022 . Some of the statements in this Management's Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in this Quarterly Report on Form 10-Q, are "forward-looking statements," within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements typically include the words "anticipate," "believe," "consider," "estimate," "expect," "forecast," "intend," "objective," "plan," "predict," "projection," "seek," "strategy," "target," "will" or other words of similar meaning. Forward-looking statements contained herein may include opinions or beliefs regarding market conditions and similar matters. In many instances, those opinions and beliefs are based upon general observations by members of our management, anecdotal evidence and our experience in the conduct of our businesses, without specific investigations or analyses. Therefore, while they reflect our view of the industries and markets in which we are involved, they should not be viewed as reflecting verifiable views or views that are necessarily shared by all who are involved in those industries or markets. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. The forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and assumptions. We wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could cause actual results to differ significantly from what is anticipated by our forward-looking statements. The most important factors that could cause actual results to differ materially from those anticipated by our forward-looking statements include, but are not limited to: an extended slowdown in some or all of the real estate markets in which we have significant homebuilding activity, including a slowdown in either the market for single family homes or the multifamily rental market; changes in general economic and financial conditions that reduce demand for our products and services, lower our profit margins or reduce our access to credit; decreased demand for our homes or Multifamily rental properties; the impact of inflation or a higher interest rate environment; the effect of increased interest rates with regard to borrowings by the funds we manage on the willingness of those funds to invest in new projects; the effects of public health issues such as a major epidemic or pandemic that could have a negative impact on the economy and on our businesses; the duration, impact and severity of which is highly uncertain; supply shortages and increased costs related to construction materials and labor; cost increases related to real estate taxes and insurance; reduced availability or increased cost of mortgage financing for homebuyers; increased interest rates or increased competition in the mortgage industry; reductions in the market value of our investments in public companies; our inability to successfully execute our strategies, including our land lighter strategy and our strategy to monetize noncore assets; our inability to acquire land at anticipated prices; the possibility that we will incur nonrecurring costs that affect earnings in one or more reporting periods; increased competition for home sales from other sellers of new and resale homes; our inability to pay down debt; government actions or other factors that might force us to terminate our program of repurchasing our stock; a decline in the value of our land inventories and resulting write-downs of the carrying value of our real estate assets; the failure of the participants in various joint ventures to honor their commitments; difficulty obtaining land-use entitlements or construction financing; natural disasters and other unforeseen events for which our insurance does not provide adequate coverage; new laws or regulatory changes that adversely affect the profitability of our businesses; and our inability to refinance our debt on terms that are as favorable as our current arrangements. Please see our Form 10-K for the fiscal year endedNovember 30, 2022 and our other filings with theSEC for a further discussion of these and other risks and uncertainties which could affect our future results. We undertake no obligation, other than those imposed by securities laws, to publicly revise any forward-looking statements to reflect events or circumstances after the date of those statements or to reflect the occurrence of anticipated or unanticipated events. 25 --------------------------------------------------------------------------------
Outlook
In these extraordinarily difficult and volatile market conditions, the Lennar team has focused on our strategies, and we have executed with precision. We ended the first quarter with stronger-than-expected revenues and deliveries, strong profitability and cash flow, a fortified balance sheet and strong liquidity. Very limited new home inventory exists, existing home supply has fallen as existing homeowners hold on to extremely low mortgage rates, and multifamily production is very limited. This, combined with the chronic housing production shortfall over the past decade, leaves the industry in what we believe will be a fairly short duration correction without an inventory overhang to resolve. The homebuilding industry has been experiencing strong headwinds and equally strong tailwinds. The headwinds have been defined byFederal Reserve -driven interest rate increases to combat high inflation. The tailwinds have been defined by housing shortages across the country resulting from production deficits over the past decade. While potential homebuyers remain challenged by affordability concerns, they are adjusting to higher interest rates and opting to purchase their homes. The housing supply shortage, especially workforce housing, continues to drive customers to stretch their wallet as incentives and price reductions have worked to meet purchasers halfway. We believe the housing market is beginning to find a point of stabilization and customers, both primary and institutional, are coming to grips with the new normal of higher but acceptable interest rates. We are seeing the kind of volatility that our core operating strategy has been built to endure. With volume and production as constants, we use margin as our volatility shock absorber. If market conditions deteriorate, we compromise margin through price reductions and increased incentives, but we generate strong cash flow. If conditions improve, we improve margins and bottom line while also generating strong cash flow. Our primary focus is on cash flow.
We have remained steadfast in our adherence to the six core strategies we adopted when the Fed began its tightening program approximately one year ago and we have added a seventh core strategy.
•We will continue to utilize our Dynamic Pricing Model in conjunction with our digital marketing platform to focus on selling homes at market-clearing prices and drive volume while building at a consistent pace to meet the needs of a supply-constrained housing market. •We will work side-by-side with our trade partners to right-size our construction costs to current market conditions, while we re-establish cycle time at pre-supply chain crisis levels. We expect recently negotiated cost reductions to be reflected in our reported numbers in the back half of the year as cost reductions will improve lagging margins. •We will continue to sharpen our attention on land and land acquisitions by relentlessly focusing on protecting cash and only purchasing land that delivers the next strong margin at today's market pricing. We recognized early on that land would be expensive relative to reduced prices, and therefore, we reconsidered every land deal in our pipeline very early on and either walked from deposits or renegotiated terms and price to today's market standards. •We will manage our operating costs and reduce our S,G&A expense so that even at lower gross margins, we will drive a strong net margin. We have been improving our S,G&A leverage over the past years quarter-by-quarter to new record lows and many of those changes, though not all, are hardwired. Nevertheless, as average sales prices come down, the percentages won't hold without corresponding additional cuts. We also know that in more difficult times, there will be upward pressure on some of our sales, marketing and realtor costs in order to find purchasers and drive new sales. •We will maintain tight inventory control. Inventory has remained flat as opposed to being lower year-over-year as one might expect, because of expanded cycle time due to the supply chain disruption. We expect to bring down our cycle time over the next few quarters. This will free up a significant amount of cash that currently is tied up in the increased inventory dollars related to homes under construction. •We will continue to focus on our cash flow and bottom line to protect and enhance our already strong balance sheet. Although bottom line profitability will be compressed year-over-year as prices and margins are impacted in a correcting market, our balance sheet and our cash position will continue to improve. This will give us the flexibility to be opportunistic as market conditions stabilize as well as to undertake stock repurchases and debt reductions that improve total shareholder returns and return on equity. •We have added an additional core strategy since last quarter-end. This is the strategy of continuous improvement throughout the company. We have created continuous improvement metrics for every leader in our company with a direct tie to performance measurement and bonus structure. We believe focusing on continuous improvement as a core strategy will help us continue to reach higher and drive harder to be the best version of ourselves. We believe 2023 is going to be complicated and volatile as theFederal Reserve and Federal Government try to minimize the consequences of aggressive interest rate hikes. There is no way to anticipate with certainty what comes next, however, we have a plan to navigate the uncertainties of 2023 with a focus on maintaining volume, maximizing margin, managing inventories, driving cash flow, managing land ownership and land spend and further enhancing our balance sheet in spite of the challenging market conditions. While we're prepared for volatility and adversity along the way, we will focus on our core operating strategies as the way to perform as expected. 26 -------------------------------------------------------------------------------- Accordingly, we are not providing the targeted guidance about our future performance that we provided in the past. Instead, we are providing broad ranges to give some boundaries for various components of our expected results for the second quarter of 2023 and full year 2023. We expect our new orders for the second quarter of 2023 to be in the range of 16,000 and 17,000. We expect our second quarter deliveries to be between 15,000 and 16,000 homes with a gross margin between 21.0% and 21.5%. We expect our S,G&A expenses as a percentage of home sale revenues will be between 7.2% and 7.4% but that percentage will adjust based on deliveries and homebuilding revenue. We expect our second quarter ending community count to be flat to slightly up year over year as we walked away from deals that would have produced new active communities, but no longer meet our margin expectations under current market conditions. Our second quarter average sales price should be in the range of$435,000 to$445,000 as we continue to price to market. Additionally, we are targeting delivery volume for the full year 2023 to be between 62,000 and 66,000 homes as we drive volume, pick up market share and build margins back up through reconciliation of construction and land costs while carefully managing S,G&A expenses.
(1) Results of Operations
Overview
We historically have experienced, and expect to continue to experience, variability in quarterly results. Our results of operations for the three months endedFebruary 28, 2023 are not necessarily indicative of the results to be expected for the full year. Our homebuilding business is seasonal in nature and generally reflects higher levels of new home order activity in our second and third fiscal quarters and increased deliveries in the second half of our fiscal year. However, a variety of factors can alter seasonal patterns. Our net earnings attributable to Lennar were$596.5 million , or$2.06 per diluted share, in the first quarter of 2023, compared to net earnings attributable to Lennar of$503.6 million , or$1.69 per diluted share, in the first quarter of 2022. Excluding mark-to-market losses on technology investments in both years, first quarter net earnings attributable to Lennar in 2023 were$614.8 million or$2.12 per diluted share, compared to first quarter net earnings attributable to Lennar in 2022 of$800.2 million or$2.70 per diluted share.
Financial information relating to our operations was as follows:
Three Months Ended February 28, 2023
(In thousands) Homebuilding Financial Services Multifamily Lennar Other Corporate Total
Revenues:
Sales of homes $ 6,093,827 - - - - 6,093,827
Sales of land 9,718 - - - - 9,718
Other revenues 52,760 182,981 143,523 7,620 - 386,884
Total revenues 6,156,305 182,981 143,523 7,620 - 6,490,429
Costs and expenses:
Costs of homes sold 4,802,843 - - - - 4,802,843
Costs of land sold 22,077 - - - - 22,077
Selling, general and administrative
expenses 449,794 - - - - 449,794
Other costs and expenses - 104,244 148,956 6,476 - 259,676 Total costs and expenses 5,274,714 104,244 148,956 6,476 - 5,534,390 Equity in earnings (loss) from unconsolidated entities, Multifamily other gain and Lennar Other other expense, net, and other gain 3,186 - (16,168) (16,947) -
(29,929)
Homebuilding other income, net 22,062 - - - -
22,062
Lennar Other unrealized losses from technology investments - - - (23,954) -
(23,954)
Operating earnings (loss)$ 906,839 78,737 (21,601) (39,757) - 924,218 Corporate general and administrative expenses - - - - 126,106
126,106
Charitable foundation contribution - - - - 13,659
13,659
Earnings (loss) before income taxes$ 906,839 78,737 (21,601) (39,757) (139,765) 784,453 27
--------------------------------------------------------------------------------
Three Months Ended February 28, 2022
(In thousands) Homebuilding Financial Services Multifamily Lennar Other Corporate Total
Revenues:
Sales of homes $ 5,721,757 - - - - 5,721,757
Sales of land 23,967 - - - - 23,967
Other revenues 6,481 176,701 267,359 7,251 - 457,792
Total revenues 5,752,205 176,701 267,359 7,251 - 6,203,516
Costs and expenses:
Costs of homes sold 4,184,864 - - - - 4,184,864
Costs of land sold 28,556 - - - - 28,556
Selling, general and administrative
expenses 428,478 - - - - 428,478
Other costs and expenses - 85,910 263,737 5,407 - 355,054
Total costs and expenses 4,641,898 85,910 263,737 5,407 - 4,996,952
Equity in earnings (loss) from
unconsolidated entities, Multifamily
other loss and Lennar Other other income
(expense), net, and other gain (loss) (286) - 1,805 (9,808) - (8,289)
Homebuilding other expense, net (171) - - - - (171)
Lennar Other unrealized gains from
technology investments - - - (395,170) - (395,170)
Operating earnings (loss)$ 1,109,850 90,791 5,427 (403,134) - 802,934 Corporate general and administrative expenses - - - - 113,661 113,661 Charitable foundation contribution - - - - 12,538 12,538 Earnings (loss) before income taxes$ 1,109,850 90,791 5,427 (403,134) (126,199) 676,735
Three Months Ended
Revenues from home sales increased 7% in the first quarter of 2023 to$6.1 billion from$5.7 billion in the first quarter of 2022. Revenues were higher primarily due to a 9% increase in the number of home deliveries to 13,659 homes from 12,538 homes in the first quarter of 2022. The average sales price of homes delivered was$448,000 in the first quarter of 2023, compared to$457,000 in the first quarter of 2022. The decrease in average sales price of homes delivered in the first quarter of 2023 compared to the same period last year was primarily due to pricing to market and product mix as a larger percentage of deliveries occurred in ourTexas segment. Gross margins on home sales were$1.3 billion , or 21.2%, in the first quarter of 2023, compared to$1.5 billion , or 26.9%, in the first quarter of 2022. During the first quarter of 2023, gross margin decreased because revenues per square foot were flat year over year as we priced homes to market while costs per square foot increased primarily due to higher materials and labor costs. In addition, land costs increased year over year. Selling, general and administrative expenses were$449.8 million in the first quarter of 2023, compared to$428.5 million in the first quarter of 2022. As a percentage of revenues from home sales, selling, general and administrative expenses improved to 7.4% in the first quarter of 2023, from 7.5% in the first quarter of 2022 as we focused on improving our leverage combined with the benefits of our technology efforts. Operating earnings for our Financial Services segment were$78.7 million ($78.2 million net of noncontrolling interests) in the first quarter of 2023, compared to$90.5 million , in the first quarter of 2022. The decrease in operating earnings was primarily due to a lower profit per loan in our mortgage business as a result of lower lock volume. Operating loss for our Multifamily segment was$21.6 million in the first quarter of 2023, compared to operating earnings of$5.4 million in the first quarter of 2022. Operating loss for our Lennar Other segment was$39.8 million ($41.2 million net of noncontrolling interests) in the first quarter of 2023, compared to operating loss of$403.1 million in the first quarter of 2022. Lennar Other operating loss in the first quarter of both 2023 and 2022 was primarily due to unrealized mark-to-market losses on our publicly traded technology investments. For the three months endedFebruary 28, 2023 and 2022, we had a tax provision of$185.1 million and$167.4 million , respectively, which resulted in an overall effective income tax rate of 23.7% and 25.0%, respectively. In the three months endedFebruary 28, 2023 , our overall effective income tax rate was lower than last year primarily due to the reinstatement of the new energy efficient home credit as a result of the enactment of the Inflation Reduction Act during the third quarter of 2022. 28 --------------------------------------------------------------------------------
Homebuilding Segments
AtFebruary 28, 2023 , our reportable Homebuilding segments and Homebuilding Other are outlined in Note 2 of the Notes to Condensed Consolidated Financial Statements. The following tables set forth selected financial and operational information related to our homebuilding operations for the periods indicated:
Selected Financial and Operational Data
Three Months Ended February 28, 2023
Gross Margins Operating Earnings (Loss)
Gross Margins Equity in Earnings
Sales of Homes Costs of Sales of Net Margins on (Loss) on Sales (Loss) from Other Income Operating Earnings
($ in thousands) Revenue Homes Gross Margin % Sales of Homes (1) of Land Other Revenue Unconsolidated Entities (Expense), net (Loss)
East $ 1,858,048 1,331,478 28.3 % 373,632 (2,384) 20,163 3,248 29,537 424,196
Central 1,023,619 827,712 19.1 % 109,020 1,862 18,941 688 11 130,522
Texas 1,016,973 817,645 19.6 % 126,576 (2,051) 3,709 - (2,915) 125,319
West 2,194,022 1,823,087 16.9 % 238,477 (9,786) 5,904 (152) (3,943) 230,500
Other (2) 1,165 2,921 (150.7) % (6,515) - 4,043 (598) (628) (3,698)
Totals $ 6,093,827 4,802,843 21.2 % 841,190 (12,359) 52,760 3,186 22,062 906,839
Three Months Ended February 28, 2022
Gross Margins Operating Earnings (Loss)
Equity in Earnings
Sales of Homes Costs of Sales of Net Margins on Gross Margins on (Loss) from Other Income Operating Earnings
($ in thousands) Revenue Homes Gross Margin % Sales of Homes (1) Sales of Land Other Revenue Unconsolidated Entities (Expense), net (Loss)
East $ 1,662,991 1,176,553 29.3 % 351,554 (5,674) 797 (1,358) 6,676 351,995
Central 1,105,929 870,611 21.3 % 150,375 1,619 234 129 (279) 152,078
Texas 805,630 573,842 28.8 % 169,941 2,398 242 - (1,269) 171,312
West 2,142,204 1,557,737 27.3 % 444,524 (839) 881 136 (3,254) 441,448
Other (2) 5,003 6,121 (22.3) % (7,979) (2,093) 4,327 807 (2,045) (6,983)
Totals $ 5,721,757 4,184,864 26.9 % 1,108,415 (4,589) 6,481 (286) (171) 1,109,850
(1)Net margins on sales of homes include selling, general and administrative
expenses.
(2)Negative gross and net margins were due to period costs and impairments in
Urban divisions that impact costs of homes sold without sufficient sales of
homes revenue to offset those costs.
Summary of Homebuilding Data
Deliveries:
Three Months Ended
Homes Dollar Value (In thousands) Average Sales Price
February 28, February 28, February 28,
2023 2022 2023 2022 2023 2022
East 4,295 4,082 $ 1,889,721 1,672,372 $ 440,000 410,000
Central 2,300 2,521 1,023,619 1,105,929 445,000 439,000
Texas 3,421 2,537 1,016,973 805,630 297,000 318,000
West 3,642 3,392 2,194,022 2,142,204 602,000 632,000
Other 1 6 1,165 5,003 1,165,000 834,000
Total 13,659 12,538 $ 6,125,500 5,731,138 $ 448,000 457,000
Of the total homes delivered listed above, 63 homes with a dollar value of $31.7
million and an average sales price of $503,000 represent home deliveries from
unconsolidated entities for the three months ended February 28, 2023 , compared
to 25 home deliveries with a dollar value of $9.4 million and an average sales
price of $375,000 for the three months ended February 28, 2022 .
29
--------------------------------------------------------------------------------Sales Incentives (1):
Three Months Ended
Average Sales Incentives Per Sales Incentives
Home Delivered as a % of Revenue
February 28, February 28,
2023 2022 2023 2022
East $ 32,400 6,700 6.9 % 1.6 %
Central 38,400 7,100 8.0 % 1.6 %
Texas 67,400 13,700 18.5 % 4.1 %
West 63,900 8,100 9.6 % 1.3 %
Other 85,000 83,400 6.8 % 9.1 %
Total $ 50,700 8,600 10.2 % 1.9 %
(1) Sales incentives relate to home deliveries during the period, excluding deliveries by unconsolidated entities.
New Orders (2):
Three Months Ended
Active Communities Homes Dollar Value (In thousands) Average Sales Price
February 28, February 28, February 28, February 28,
2023 2022 2023 2022 2023 2022 2023 2022
East 346 347 4,277 4,910 $ 1,851,896 2,133,056 $ 433,000 434,000
Central 293 298 2,305 3,112 970,098 1,402,138 421,000 451,000
Texas 219 216 3,142 2,766 879,456 921,785 280,000 333,000
West 356 340 4,465 4,954 2,708,326 3,335,932 607,000 673,000
Other 3 3 5 5 3,686 4,628 737,000 926,000
Total 1,217 1,204 14,194 15,747 $ 6,413,462 7,797,539 $ 452,000 495,000
Of the total homes listed above, 97 homes with a dollar value of $38.3 million
and an average sales price of $394,000 represent homes in seven active
communities from unconsolidated entities for the three months ended February 28,
2023 , compared to 44 homes with a dollar value of $17.3 million and an average
sales price of $393,000 in four active communities for the three months ended
February 28, 2022 .
(2)Homes represent the number of new sales contracts executed with homebuyers,
net of cancellations, during the three months ended
30
--------------------------------------------------------------------------------We experienced cancellation rates in our Homebuilding segments and Homebuilding other as follows:
Three Months Ended
February 28,
2023 2022
East 23 % 7 %
Central 29 % 7 %
Texas 24 % 19 %
West 13 % 10 %
Other 17 % 79 %
Total 22 % 10 %
Backlog:
At
Homes Dollar Value (In thousands) Average Sales Price
February 28, February 28, February 28,
2023 2022 2023 2022 2023 2022
East 8,687 9,115 $ 3,782,500 4,041,347 $ 435,000 443,000
Central 4,030 5,695 1,801,908 2,617,383 447,000 460,000
Texas 2,418 4,495 699,567 1,569,424 289,000 349,000
West 4,263 8,027 2,740,782 5,328,890 643,000 664,000
Other 5 3 3,685 3,567 737,000 1,189,000
Total 19,403 27,335 $ 9,028,442 13,560,611 $ 465,000 496,000
Of the total homes in backlog listed above, 200 homes with a backlog dollar
value of
Backlog represents the number of homes under sales contracts. Homes are sold using sales contracts, which are generally accompanied by sales deposits. In some instances, purchasers are permitted to cancel sales if they fail to qualify for financing or under certain other circumstances. Various state and federal laws and regulations may sometimes give purchasers a right to cancel homes in backlog. We do not recognize revenue on homes under sales contracts until the sales are closed and title passes to the new homeowners.
Three Months Ended
Homebuilding East: Revenues from home sales increased in the first quarter of 2023 compared to the first quarter of 2022, primarily due to an increase in the number of home deliveries in all the states in the segment except inNew Jersey and an increase in the average sales price of homes delivered in all the states in the segment. The increase in the number of home deliveries was primarily due to an increase in the number of deliveries per active community. The increase in the average sales price of homes delivered was primarily due to product mix. In the first quarter of 2023, an increase in revenues per square foot was offset by an increase in costs per square foot primarily due to higher materials and labor costs, thus gross margin percentage of home deliveries decreased year over year. Homebuilding Central: Revenues from home sales decreased in the first quarter of 2023 compared to the first quarter of 2022, primarily due to a decrease in the number of home deliveries in all the states in the segment except inIllinois ,Indiana ,North Carolina andTennessee while the average sales price of homes delivered increased in all the states in the segment except inNorth Carolina andVirginia . The decrease in the number of home deliveries inGeorgia ,Maryland ,Minnesota andVirginia was primarily due to a decrease in the number of deliveries per active community due to the timing of opening and closing of communities as a result of supply chain disruptions. The increase in the number of home deliveries inIllinois ,Indiana ,North Carolina andTennessee was primarily due to an increase in the number of deliveries per active community. The increase in the average sales price of homes delivered in all the states in the segment except inNorth Carolina andVirginia was primarily due to product mix. The decrease in the average sales price of homes delivered inNorth Carolina andVirginia was primarily due to pricing to market and product mix. In the first quarter of 2023, a slight increase in revenues per square foot was offset by an increase in costs per square foot primarily due to higher materials and labor costs, thus gross margin percentage of home deliveries decreased year over year. Homebuilding Texas: Revenues from home sales increased in the first quarter of 2023 compared to the first quarter of 2022, primarily due to an increase in the number of home deliveries which was partially offset by a decrease in the average sales price of homes delivered. The increase in the number of home deliveries was primarily due to an increase in the number of deliveries per active community. The decrease in the average sales price of homes delivered was primarily due to pricing to 31 -------------------------------------------------------------------------------- market. In the first quarter of 2023, a decrease in revenues per square foot and an increase in costs per square foot primarily due to higher materials and labor costs, resulted in a decrease in gross margin percentage of home deliveries. Homebuilding West: Revenues from home sales increased in the first quarter of 2023 compared to the first quarter of 2022, primarily due to an increase in the number of home deliveries in all the states in the segment except inUtah , which was partially offset by a decrease in the average sales price of homes delivered in all the states in the segment except inUtah andWashington . The increase in the number of home deliveries in all the states in the segment except inUtah was primarily due to an increase in the number of deliveries per active community. The decrease in the number of home deliveries inUtah was primarily due to a decrease in the number of deliveries per active community due to the timing of opening and closing of communities as a result of supply chain disruptions. The increase in the average sales price of homes delivered inUtah andWashington was primarily due to product mix. The decrease in the average sales price of homes delivered in other states of the segment was primarily due to pricing to market and product mix. In the first quarter of 2023, a decrease in revenues per square foot and an increase in costs per square foot primarily due to higher materials and labor costs, resulted in a decrease in gross margin percentage of home deliveries.
Financial Services Segment
Our Financial Services reportable segment provides mortgage financing, title and closing services primarily for buyers of our homes. The segment also originates and sells into securitizations commercial mortgage loans through itsLMF Commercial business. Our Financial Services segment sells substantially all of the residential loans it originates within a short period in the secondary mortgage market, the majority of which are sold on a servicing released, non-recourse basis. After the loans are sold, we retain potential liability for possible claims by purchasers that we breached certain limited industry-standard representations and warranties in the loan sale agreements. The following table sets forth selected financial and operational information related to the residential mortgage and title activities of our Financial Services segment: Three Months Ended February 28, (Dollars in thousands) 2023 2022 Dollar value of mortgages originated $ 3,154,000
2,760,000
Number of mortgages originated 8,500
7,400
Mortgage capture rate of Lennar homebuyers 78%
74%
Number of title and closing service transactions 14,200
13,700
AtFebruary 28, 2023 andNovember 30, 2022 , the carrying value of Financial Services' commercial mortgage-backed securities ("CMBS") was$141.9 million and$143.3 million , respectively. Details of these securities and related debt are within Note 2 of the Notes to Condensed Consolidated Financial Statements.
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